WASHINGTON, DC—Belmont Crossing, a 275-unit apartment building at 4201 7th St., SE, has closed, selling for $13.5 million. If that price seems, well, 2014ish, that is because it is.
The property, owned by a JV between Kettler and Boston Capital, went under contract more than a year ago. The transaction was then put on hold as the tenants exercised their rights under the District's Opportunity to Purchase Act. Ultimately their efforts to purchase the building did not work out and the sale reverted back to the original buyer, a private investment company in DC that has a large footprint in this submarket.
By that point the property had appreciated by some 50% since the deal was originally struck, according to Greysteel's multifamily investment sales team head Ari Firoozabadi, who brokered the transaction.
If someone wasn't familiar with the circumstances of the transaction, the trade would be seen as a value-add buy requiring a great deal of renovation based on the prices that similar assets have traded for in the Ward 8 submarket, he tells GlobeSt.com.
Not that this deal was a bad deal for the seller, he adds. "It is, in fact, a very good one, based on the economics."
Also, the buyer is well positioned to wring some value out of the property without making significant investments or upgrades. "The new owner thinks the building can be managed more efficiently," Firoozabadi says, noting that it owns about 700 units in close proximity to Belmont Crossing. "The seller wasn't as dominate in this submarket."
The property operates under the Low Income Housing Tax Credit (LIHTC) program. It was originally built in the 1970s and then rehabbed some fourteen years ago under LIHTC. "In 2002 it went into service and the initial compliance periods ends in 2017," Firoozabadi says. "The extended use period expires in 2037."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
